What is the Future of Cryptocurrency?
Few subjects in modern dialogue create such a visceral and divisive reaction from the population as cryptocurrency. Depending on who you ask, you’ll get a unique response, complete with different facts, figures, and predictions--some of them contradictory to one another.
When it comes to the future of cryptocurrency, everyone has their own take on where the technology and digital currency trends are headed.
Some say crypto has already overstayed its welcome and is destined to fail, while others see it completely dismantling the global financial system, revolutionizing the way we do business at every level of the economy.
What does the future of cryptocurrency have in store? Here’s what we think will happen in the next few years and even further down the road.
Increased Adoption and Availability
You don’t need to be a crypto enthusiast to have noticed the major shift that took place in just the past 12 months – adoption is on the rise, and hype cycles have reached new heights.
As the pandemic swept the world and central banks printed trillions at a moment’s notice, everyday investors and day traders have turned to cryptocurrency in droves, pumping unprecedented amounts of money into Bitcoin and various altcoins, and using cryptocurrency for everyday transactions.
It didn’t take long for the global crypto market cap to burst over $1 trillion and will likely be pushing $2 trillion by the end of 2021.
A huge factor here is the increased access and availability of cryptocurrency on major platforms such as Coinbase, Robinhood, Binance, and more. While there was once a learning curve required to purchase and store assets like Bitcoin and Ethereum, the playing field has been leveled, and the floodgates opened.
We predict accessibility to expand even further in the months and years to come, with more press, more education, and more hype creating the perfect storm for big bull markets. Conversely, the widespread adoption of crypto will mean the inevitable use of it for illicit financial activity such as fraud and money laundering.
Institutions Get into the Game
Retail investors have typically been the ones leading the charge on cryptocurrency, although a handful of big names like Tesla co-founder Elon Musk and Michael Saylor have sparked the interest of institutional investors around the world in recent months.
This is quite a change of tune from just a few years ago when established, well-known investors would not even mention crypto without a grimace and an upturned nose. Most regulators, such as the SEC (Securities and Exchange Commission) and the Federal Reserve, gave a similar reaction but have since changed their tune about holding digital assets and purchases, despite little understanding of blockchain technology. Even popular crypto exchange Ripple has accused the SEC of "non-compliance" with its own regulations and internal standards in an ongoing lawsuit.
But thanks to some good press and a few massive bull runs, institutions are now recognizing cryptocurrencies as a legitimate store of market value, purchasing hundreds of millions of Bitcoin at a time, in some cases.
This isn’t to say that institutional investors are entirely on board with the crypto paradigm shift – far from it, in most instances. However, it’s refreshing to see that these big players are finally coming around to the idea that “digital gold” isn’t such a bad idea, after all, and we will likely see more big-time funds dabble in crypto in coming years.
Legacy Finance Makes the Shift
It sounds like the classic Rebels vs. Empire story from your favorite sci-fi franchise - or at least that’s how many like to view the competing forces of crypto and decentralized finance pitted against the legacy financial institutions and governments of the world.
But in a surprising turn of events in the past few months, it appears that these legacy players are joining up with the opposition, showing a far more accommodating position on cryptocurrency than many expected in years prior.
Visa’s partnership with Crypto.com was one of the first and most notable moves in this direction, with other heavy hitters like PayPal, Fidelity, and Goldman Sachs quickly following suit.
Each company has a unique method of entry into the crypto space, reflecting the diverse applications and approaches that crypto has to offer everyday shoppers, savers, and investors.
We’ve also seen several new ETFs come to the market recently, revealing a greater interest in cryptocurrencies and the technologies that underpin them. Most notable is the Amplify Transformational Data Sharing ETF (BLOK), which boasts an impressive $1.35 billion in assets under management at the moment.
Legacy finance is notoriously slow to move on trends, but we think these are good signs of what’s to come in an industry that appears to have no choice but to get on board with crypto.
Altcoin Mania Hits New Highs
Debatably, 2021 has been the year of the altcoin, with unbelievable gains made across the entire crypto space and some unlikely heroes stepping up out of the woodwork.
Ethereum, for example, has seen a 255% return YTD, and Litecoin has had a similarly impressive run alongside it. Of course, we watched meme coins like Doge see huge hype and growth as a result, although that excitement appears to have tempered for now.
The point is that altcoins rose out of obscurity and into the mainstream this year, which is a sign of plenty more enthusiasm to come. There are more to come, too, with Facebook's much-hyped Libra platform and altcoin still yet to come to market.
Bitcoin remains at the head of the pack in terms of market cap and popularity, of course. Still, altcoins having bull runs of their own is an exciting development in the crypto space, furthering the mission of decentralization and expanding options for curious investors.
The Bitcoin Gold Rush Continues
Enough about altcoins for the moment – what’s the future of Bitcoin? While the price has cooled off a bit since the epic all-time highs of 2020, Bitcoin is still attracting significant attention from retail and institutional investors.
For many, the asset is still synonymous with crypto in general, rightfully earning its title of “digital gold.”
But while Bitcoin has endured almost every argument in the book thus far, it has struggled to overcome key issues in recent months – energy cost and environmental impact.
The competition for Bitcoin is fierce at the moment, especially with institutions funneling in huge amounts of cash. Therefore, critics are asking whether the high energy demands of Bitcoin will be a problem moving forward, considering that the last Bitcoin will not be mined for another 120 years down the road.
There will be no lack of interest in Bitcoin moving forward, but we’re curious to see how miners and investors go about obtaining this king of cryptocurrencies as prices rise.
Renewable Energy = Mining Advantage
In general, there are many variables to consider on the subject of Bitcoin mining and crypto mining as the space evolves and becomes more established.
The fact that traditional crypto mining is relatively inefficient is no secret, and this goes against many of the environmental agendas pushed by legacy institutions, governments, and organizations.
For this reason, we expect crypto mining to change tack rather severely in the next few years, notably in the methods by which energy is obtained and allocated towards expanded mining operations.
Wind and solar, for example, have long been used to supplement natural gas and coal power throughout the world, and these assets have only just begun to be deployed for crypto mining purposes.
What this means for the crypto industry is lower costs, reduced carbon footprints, and, most intriguingly – far more significant crypto profits over time.
Conclusion
The future of crypto is nearer than you think. For crypto miners looking for the next big advantage, look no further than renewable energy. Now is the time to get into position.
Sources:
10 Most Important Cryptocurrencies other than Bitcoin | Investopedia